‘Global economic superstorm coming’ | Sunday Observer

‘Global economic superstorm coming’

22 September, 2019
President Maithripala Sirisena presents a token of appreciation to guest of honour former Deputy Speaker, House of Commons, Lord Naseby. Pix: Wimal Karunathilake
President Maithripala Sirisena presents a token of appreciation to guest of honour former Deputy Speaker, House of Commons, Lord Naseby. Pix: Wimal Karunathilake

Sri Lanka could not be isolated when considering world trends. Although, the country is an island it is of paramount importance to link with the rest of the world in building trade and international relationships. These links will provide an impetus for capital shift, Senior Business Consultant/Economist Dr. Kenneth de Zilwa said.

The world’s GDP is expected to grow at 3 percent in 2020.

“The world economy is currently driven by 2 large players, the USA and China. With gross fixed capital formation as a percentage of GDP fluctuating over the years it has resulted in an increase in the cost of funds. The borrowing cost is high and the world is heading towards new value creation efforts,” he said at the technical sessions of the Annual conference 2019 under the theme ‘Role of Professionals in sustainable national development’, conducted by the Organisation of Professional Associations of Sri Lanka held last week in Colombo.

Speaking on global business trends, sustainable development, and Sri Lanka’s manufacturing, he said that when considering Sri Lanka, we need to look at a mechanism to ease monetary policy.

A panel discussion in progress.

“The yields continue to drop, However, the monetary policy is not an effective tool for all ills. The year 2020 will be a challenging year for policy makers. It will also present opportunities for savvy investors and savvy economists,” he said.

“We are now in a global super storm. Though, the global recession is delaying it is bound to happen. The global debt/GDP has become 252 percent. The interest rates are declining, capital formation is declining, purchase managers index is declining. The global balance sheets are at the restructuring stage. The corporate profits and cost of employment are increasing,” he said.

“Agriculture plays a crucial role in ensuring food security. The food security encompasses the properties of availability, access, affordability, quality, nutrition and safety. There has been 4.8 percent growth in the agriculture production in 2018 despite the challenging weather conditions. Technology adaption is at a higher rate in Sri Lanka and this is the secret of sustainable development,” Senior Lecturer University of Peradeniya, Prof. Buddhi Marambe said.

Speaking on national food security and sustainable agriculture, he said that food imports have become inevitable in the face of unfavourable weather conditions. There are many challenges for agriculture in the next 10 years and one key challenge is people’s changing food habits. This has resulted in an increasing demand for grains which in turn has increased human consumption. The demand for animal feed also has increased over the years, he said.

The agriculture sector is experiencing 20 to 40 percent post harvest losses especially in terms of perishable products. We need to think in a novel way to overcome this problem which will have serious implications for food production, he said.

The country is moving towards an overarching agriculture policy and this will benefit the country in the long run which aims at achieving food security, Prof. Marambe said. The world economy has undergone tremendous changes with power shifted to Asia, which was dominated by the West in the past. The next 15 to 20 years will belong to 6 of world dominant powers including India, China, Korea and Indonesia. The need will arise to modify the education system to meet the new challenges, Former Secretary Ministry of Foreign Affairs, Dr. Palitha Kohana said.

Speaking on foreign policy and international relations, he said that over 57 percent of our exports go to the West and the USA accounts for 27 percent of that total.

“We should not lose sight of the Western powers. It is important to see how we can manage our relationships with these power blocks and the former powers we used to trade with. The Middle East is another factor that we should consider. However, the Middle East is constantly in turmoil. We need to be very cautious how we deal with the Middle East,” he said.

Africa is an economy that is growing over 6 percent with the help of Chinese investments. This growth is happening primarily after 30 years. India should be a prominent feature in formulating foreign policy in terms of our close relationship with culture, economy and religion.

Sri Lanka’s opportunity cost is estimated at US $ 200 billion for underestimating India which paved the way for a terrorist organization. However, the relationship between India and Sri Lanka was restored later incurring a heavy cost to the country.

The ‘Belt and Road Initiative’ (BRI) by China generated a major reaction from around the world. It enabled an endless reserve to be available to develop infrastructure for the entire region to grow together. Under BRI. US $ 4 to 8 trillion was made available. I personally do not believe that we are in a China debt trap. However, we need not have given away part of our real estate. As China is a growing market it will cause waves in dominant markets. Sri Lanka could move rapidly from its middle income status to a different economic status.

The country should make use of its strong naval capacity and receive the benefit from the 200 nautical mile zone which the country has the right to enjoy.

“We need to assert our claims on 700 nautical mile region that is to the South of Sri Lanka. We need to make a concerted effort to explore resources in this region with the support of the United Nations. We certainly have seen India and China showing interest in our country. It is no secret that a small country such as Sri Lanka will not have developed up to its current position without the trade that took place in the past from the countries such as India and China. India is sensitive to our issues and China has an economic interest in our country,” he said. Migration will always happen, and a brain-drain will also take place. We need to create a sense of confidence in the country. The building of confidence is an extremely important task. The authorities need to guarantee security to encourage people to stay here rather than to migrate in search of greener pastures.

On a different note, he said - I do not think Sri Lanka needs SOFA as much as the USA needs it.

Though, China and Iran entered into SOFA, we do not need this. However, this is a decision for the policy makers. We could have a relationship with the USA without SOFA. We need to cultivate good relationship with the USA for our own benefit.

“We are faced with three global challenges, namely global warming, global aging and global learning. The learning has become an essential component in day to day life. It is increasingly important to practice management of people, time and action in today’s context,” Director Post Graduate Institute, University of Sri Jayawardenapura Porf. Ajantha Dharmasiri said.

Management is a process which involves planning, organizing, leading and controlling. Tasks need to be performed collectively, collaboratively and committedly. For better results artificial intelligence and emotional intelligence should be blended, High tech, high touch harmony which is a good combination is the future, he said speaking on learning and leading for people professionals.

“Leading and learning are inseparable. It is necessary to concentrate on the individual for innovation and interaction. The new technology blended with being humane, is the way forward. The analytic skills are the key. One needs to have business acumen, creativity, digital smartness and empathy in building relationships. It is necessary to be “lean, green and seen,” he said. People need to be multi generational, multi cultural and multi skilled together with inclusivity and diversity. We need to have competent and confident leaders.

The mind set should be changed to risk taking and capable of facing challenges, especially with our entrepreneurs, They are the gut based decision makers and are distinctively different. We need to start thinking fresh and different to make an impact on the society, he said. People should eat a balanced diet, not only for the benefit of themselves, but for the country as a whole, Consultant Clinical Nutritionist Institute of Nutritional Science India, Dr. Ms Varsha Tarvady said speaking on nutrition for healthier nation.

“Most of the people do not visit a dietician assuming that she/he will prevent them having their favorite food items. However, this is not the case in every instance. The dietician will insist on a planned and controled diet which is result oriented. This will have a positive impact on people who seek professional advice,” she said.

The dietary patterns have changed in today’s context. However, it is important to take in required quantities of food nutrition for the body to function properly.

This will prevent unnecessary spending on supplementary food for nutrition deficiencies. People can lead a healthier life with correct foods habits and regular exercise, she said.